Let’s be honest—retirement was supposed to be the time when you finally relax. But rising prices, health care costs, and yes, taxes, are making it harder for many older Americans to get by. And now, even Social Security—something you paid into your whole life—might be getting taxed.
If that sounds unfair, you’re not alone. The good news? Lawmakers are finally talking about ways to lighten the load.
Here’s what’s really going on, and five things every retiree should know about the new tax relief proposals aimed at helping seniors keep more of their money.
1. A New Bill Could Double Your Tax Deduction
A new bipartisan proposal, called the Bonus Tax Relief for America’s Seniors Act, could significantly boost the additional standard deduction for people over 65.
Right now, if you’re 65 or older, you get an extra deduction—on top of your standard one. For example, in 2025, the additional amount is $2,000 for single filers or $3,200 for married couples.
The new bill would more than double that:
- $5,000 for single filers
- $10,000 for couples filing jointly
That’s a real savings boost, and it could help offset rising costs or reduce the taxes you owe on Social Security.
2. The Cost of Living Keeps Climbing
If you feel like your retirement dollars don’t stretch as far, you’re not imagining it. So far this year:
- Food prices are up 2.5%
- Rent and housing costs are up 4.4%
- Health care services have jumped nearly 3%
That extra standard deduction could be just enough to make a difference for many retirees who are struggling to keep up.
3. Nearly Half of Retirees Pay Taxes on Social Security
Here’s a fact that surprises many people: almost 50% of Social Security recipients now owe federal income tax on their benefits.
Back in the 1980s, that number was under 10%. What changed?
Related: 8 Fun and Flexible Jobs for Retirees Who Want Extra Cash
The income limits for taxing Social Security haven’t been adjusted for inflation in . So even modest income from a part-time job, IRA withdrawals, or investments can push you into the taxable zone.
That’s part of why this new bill matters—it could protect more of your benefit from taxes.
4. A Second Proposal Is Gaining Attention
Another plan from the House GOP aims to temporarily boost the extra standard deduction by $4,000 for older adults, through 2028. It’s part of a larger $4 trillion tax proposal.
While it’s not permanent, it could still offer real relief to retirees—especially those who don’t itemize deductions and rely on the standard option.
Related: 8 Financial Planning Myths That Could Be Holding You Back
5. More Lawmakers Are Talking About Social Security Tax Reform
Some Republicans and Democrats are also considering separate proposals to end federal taxes on Social Security entirely.
Even former President Trump campaigned on the idea, though experts warn it would be complicated to pull off without harming Social Security’s long-term funding.
Still, with 63% of Americans more worried about running out of money than dying, according to Allianz Life, the pressure is on for Congress to take action.
Bottom Line
Retirement shouldn’t feel like a constant financial squeeze. Whether it’s groceries, rent, or taxes on your Social Security, every dollar counts. These new tax proposals may not solve everything, but they could be a step in the right direction—putting more money back in your pocket when you need it most.
Keep an eye on how these bills move through Congress. And in the meantime, talk to a tax pro or financial adviser about how to make the most of your deductions today.
This article was written by Loretta James. AI tools were used lightly for grammar and formatting, but the ideas, words, and edits are all mine.
